Associated Press Wire
Ford Motor Co. expects to spend $1 billion before taxes this year on restructuring in North America and Europe, according to the company's annual report. The No. 2 U.S. automaker also said it doesn't expect to make a profit in 2006 as it continues to struggle with declining U.S. market share and rising costs. The report was filed late Wednesday with the U.S. Securities and Exchange Commission. Ford said the $1 billion charge includes $250 million to cut hourly workers in North America and $250 million to write off assets at North American plants. The rest will be used for job cuts in Europe and at former Visteon Corp. facilities that were spun back to Ford last year.
Ford plans to cut 30,000 jobs and close 14 facilities by 2012 under its Way Forward plan, announced earlier this year. Ford said its North American plants are running at 75 percent of their total capacity, a level it said is unsustainable.
The Dearborn-based automaker said it's considering taking a charge in the current quarter related to the cost of its "jobs bank," which pays idled workers' wages and benefits. Ford said it has had relatively few workers in the jobs bank until now but is expecting that number to grow substantially as it cuts jobs. Ford has about 1,100 workers in the jobs bank right now, or about 1 percent of its hourly workforce in North America.
Ford also warned it could be hurt if a major competitor files for bankruptcy protection. Ford didn't name the competitor, but No. 1 U.S. automaker General Motors Corp. has been the subject of bankruptcy speculation for several months because of declining U.S. market share and heavy losses.
Ford said a competitor in bankruptcy could gain a significant advantage since it could negotiate cheaper labor contracts. GM has consistently said that bankruptcy is not an option as it restructures its North American operations.
Ford also revealed in the filing that it gave Americas President Mark Fields a $1 million retention bonus when he was named to his new position last fall. Fields, who is one of the main architects of Ford's restructuring plan, will have to repay the money if he leaves voluntarily in the next two years.
The company said Ford Chairman and CEO Bill Ford will receive no salary, bonus or long-term compensation this year unless the automaker reaches sustained profitability.
Ford shares fell 29 cents, or 3.6 percent, to close at $7.66 on the NYSE.
In a note to investors, Goldman Sachs analyst Robert Barry said Ford's goal of stabilizing market share in 2006 is "almost impossible to envision" since it faces significant competition from GM on trucks and sport utility vehicles and its car sales could drop as newer imports reach the market.